Americans spend about 10 percent of their monthly income on debts such as auto loans and credit cards. While that may not be a dangerous level for most people, it is a good idea for Virginia residents to know where that debt is going. As a general rule, student and auto loans are easier to manage compared to credit card debt because of the difference in interest charged.
Those who struggle to avoid using their credit cards should use a debit card to make purchases instead. Making a budget can be an effective way for a person to understand his or her financial health and make changes if necessary such as shopping less often. According to LendingTree, consumer debt is going to reach $4 trillion by the end of 2018. Despite this increase in debt totals, the credit card delinquency rate is only 2.4 percent.
It is an indication that individuals are able to manage their debt loads. However, as interest rates rise, it could be a good idea to use a personal loan to refinance credit card debt. Consolidating student loans can result in a fixed rate for the life of the loan, which can guard against future rate increases. The Federal Reserve is likely to increase rates throughout 2018.
A personal bankruptcy may make it easier for an individual to get a better handle on his or her outstanding debt. Credit card, auto loan and personal loan balances can generally be discharged in Chapter 7 cases. Student loans may be discharged in cases of extreme hardship. An attorney may be able to explain the process of filing for bankruptcy as well as the benefits of doing so.